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The focus is on whether US stocks can catch up with European indices, as European stocks have had a strong start this year. Despite this, LVMH is lagging due to weak sales in its drinks division in the US and China.
LVMH, previously Europe’s highest valued company, has slipped behind Hermes, showing weak performance since March. Luxury is a crucial segment, as seen with Hermes’ continued success, but the sector in Europe shows signs of fragmentation.
lvmh stock performance
LVMH’s stock has dropped 20% in 2025, with limited prospects for recovery as earnings estimates are not optimistic. In contrast, Nvidia shows positive growth expectations, although estimates have been slightly lowered.
The luxury 10 index has gained 5% this year, with a 120% return over five years. However, issues at LVMH could impact the ability of European stocks to outperform US stocks, especially as US tech recovers.
Overall, the outlook for Europe’s luxury sector seems uncertain due to LVMH’s struggles, affecting European market support. Meanwhile, growth in US tech challenges European stock market performance in the ongoing quarter.
economic balance between regions
What we’re witnessing is a moment where the balance between regions is shifting. European equities started the year ahead, outpacing the US, yet now their continued lead hinges on select pillars that are showing cracks. One in particular—LVMH—has been losing momentum, primarily due to underwhelming results in its drinks segment across both the American and Chinese markets. It’s not just a company slipping; it’s a once-reliable heavyweight suddenly lacking forward thrust.
Since March, Arnault’s firm, long seen as a bellwether for European strength, has decelerated markedly. The crown of Europe’s top-valued firm no longer rests with it. Hermes has taken that place, and that shift speaks volumes about internal divergence within luxury. Not all players are under pressure, but the fragmentation is clear. Some names power ahead, others quietly slip.
As traders, we must pay close attention to where the pressure points are forming. The 20% fall in valuation for LVMH this year is no minor adjustment—it reflects a material change in sentiment. Forward earnings expectations remain muted as well, suggesting that relief will not arrive soon. That matters because luxury had been a source of steady outperformance for European equities. With one of its largest anchors weakened, that support could falter.
Meanwhile, across the Atlantic, tech resumes its push. Traders should note the resilience in names like Nvidia. Yes, forward estimates have been nudged lower, but the broader mood around US growth equities remains intact. This stands in stark contrast to the cautious tone encircling parts of Europe’s luxury segment.
The Luxury 10 index still shows a moderate yearly gain of 5%, and five-year returns remain robust. But those numbers mask questions inside the sector. What was once a clean, transparent play on affluence and consumer pricing power now calls for greater selectivity. One cannot treat European luxury as a uniform trade anymore. Knowing which names are driving performance—and which are not—is essential in structuring positions.
In the weeks ahead, this divergence matters. It’s not just about east versus west, or luxury versus growth. We’re seeing a test of sectors that traditionally offered high conviction. Some are holding up, while others unravel quietly under pressure. This is when strategy comes into tighter focus. How we rotate exposure, how we manage risk tied to broader estimates, and how earnings surprises are interpreted all need review.
Maintaining exposure to growth-heavy names with stable-to-rising sentiment could continue paying off. If the pressure on certain European brands persists, relative performance will continue to lean in favour of US counterparts. What once felt balanced isn’t right now. The tables do shift, and we must move with them.
